Templeton Asset Management Ltd (TAML) has successfully exited from all investments held in the Templeton Strategic Emerging Markets Fund.
Templeton Asset Management Ltd (TAML) has successfully exited from all investments held in the Templeton Strategic Emerging Markets Fund.
TSEMF was established in 2000 and is led by Dr J Mark Mobius, executive chairman of TAML, and a team of investment professionals based in five key global emerging market centers. The Fund made strategic investments in listed and unlisted companies across a variety of sectors and throughout the global emerging markets, with a specific emphasis on Greater China, India, and the former Soviet Union.
The USD 110.4 million TSEMF generated an annualised gross internal rate of return (IRR) of 24.4% (net of expenses and gross of management and performance fees) and net/net IRR of 19.8% (net of all expenses and fees including performance fee) through 31 December 2006. The fund’s total disbursements amounted to USD 246.2 million, representing a multiple of 2.2 times initial committed capital.
Dr Mobius said ‘We are pleased with the success of our first private equity fund, as it validates our investment strategy and sets direction for our future endeavors in the alternative asset space. Private equity will continue to play an important role in our group.’
Examples of investments by TSEMF include the following:
- Aurobindo Pharmaceuticals Ltd: a Bombay Stock Exchange-listed Indian manufacturer of pharmaceuticals, including generic and bulk drugs. The Fund invested a total of USD1.0 million to finance the company’s mid-to-long term development plan of moving further into the high-margin formulations business. Adding value to the investment throughout its nearly five-year holding period, the Fund eventually exited its investment in Aurobindo in January 2006 through the open stock market, returning a gross IRR of 51.7 percent or a 3.8 times the invested capital.
- Perekrestok Holdings Ltd/ X5 Retail Group NV: the leader in the Russian food retail market, bD15.1 million in Perekrestok in April 2003 to fund the group’s regional expansion plans. In May 2006, Perekrestok was merged and integrated into the X5 Retail Group (erstwhile Pyaterochka Holdings), reverse-listing Perekrestok on the London Stock Exchange. The Fund exited through a negotiated transaction with management of X5 Retail Group in November of the same year. In total, TSEMF’s investment in Perekrestok/ X5 yielded a gross IRR of 60.2 percent, or a 5.2 times return on capital.
- Yaolan Ltd (also known as BabyCare): a developer and distributor of proprietary premium food products for expectant mothers, babies and families in China. In August 2002, TSEMF made a total investment of US$3.5 million via a convertible loan note and a zero-coupon bond to fund the company’s working capital needs and expansion into new markets. The Fund exited Babycare in the fourth quarter of 2005 redeeming its note and bond at a profit.
TSEMF is managed by Templeton Asset Management Ltd, which has 13 offices located throughout the global emerging markets. TAML’s emerging markets investment team is headed by Dr. J. Mark Mobius, who has over 30 years of emerging markets investment experience. His team manages more than USD 33 billion in assets as of 31 March 2007.
